Sector-Consumer Durables A. Industry-ACs & Refrigerator

S.no Company Name

Auditor’s Name

Type Topic Particulars Principal Audit Procedure

1 Johnson Controls-Hitachi Air Conditioning India Ltd.

Price Waterhouse & Co. Chartered Accountants LLP

KAM 1. Assessment of Provision for warranty costs and related disclosures

1. The Company provides warranty on sale of Air Conditioners and Refrigerators to customers and recognizes provision in respect of the costs expected to fulfill the warranty obligation over the period of the warranty which ranges between 1 to 10 years. In accordance with the requirements of Ind AS 37 – Provisions, Contingent Liabilities and Contingent Assets, the provision towards warranty obligation is estimated by the Company, primarily considering factors such as historical trend, average historical failure rate, and estimation of expected pattern of future claims and estimated replacement cost. In the case of recently launched products, management’s internal technical experts are involved in the estimation of the failure rate during the period of warranty. The estimation of warranty costs involves significant management judgments and estimates as described above, and the amount and disclosures are significant to the financial statements. Accordingly, this has been considered as key audit matter. (Refer to Note 34 to the financial statements)

1. Understood, evaluated and tested the design and operating effectiveness of the controls over estimation of warranty costs and related accruals. • Understood the warranty terms offered by the Company on sale of products. • Assessed management’s estimation process by performing a look-back analysis for warranty costs accruals made in prior year. • Evaluated the method used by management in making the accounting estimate by verifying various input factors such as historical trend, average historical failure rate, estimation of expected pattern of future claims and estimated replacement cost, and by carrying out discussions with management’s internal technical experts. • Verified the computation of provision for warranty costs. • Verified the computation for determining the present value in the case of warranty for periods exceeding one year. Verified the adequacy of the disclosures in the financial statements. Based on the above audit procedures performed, we did not find any material exceptions with regard to the management assessment of provision for warranty costs and the related disclosures thereof.

2 Blue Star Ltd.

Deloitte Haskins & Sells LLP

KAM 1. Accounting for fixed price contracts

1. Estimate of effort is a critical estimate to determine revenues from fixed price contracts and liability for onerous obligations. This estimate has an inherent uncertainty as it requires measurement of the progress of

1. a. Assessing the appropriateness of the relevant accounting policy and Company’s measurement of the actual effort till date and the total estimated effort to completion of performance obligations. b. Evaluation of the design and implementation of

2. Assessment of the carrying value of billed and unbilled receivables 3. Recording sale of unitary products in the appropriate accounting period

contracts, which is based on effort till date and effort required to complete the remaining contract performance obligations. (Refer Note 14, 21, 25 and 48 of the standalone financial statements) 2. The appropriate valuation of billed and unbilled receivables is dependent on a number of factors such as age, credit worthiness, and, intent and ability of counterparties to make payment. (Refer Note 11 and 14 of the standalone financial statements) 3. Revenue is recognized when performance obligations are satisfied by transferring promised goods to customers. Goods are considered transferred when the customer obtains ‘control’ of the promised goods.

internal controls over recording of actual effort till date and estimation of effort required to complete the performance obligations. c. Testing the operating effectiveness of the said internal controls for a selected sample of contracts. substantive tests on a sample of contracts to identify, if any, significant variations in actual efforts till date and total efforts required to complete the performance obligations and verifying whether those variations have been factored in recognizing revenue for the year. d. Identifying onerous contracts to record a provision for expected costs to be incurred till completion of the contract. 2. a. Evaluation of the design and implementation of internal controls over review of valuation of billed and unbilled receivables including estimation of expected credit loss. b. Testing the operating effectiveness of the said internal controls for selected samples. c. Scrutinising receivable accounts to confirm management’s assessment about recoverability of the receivables, having regards to credit worthiness of the counterparties and the intent of the counterparties to make payment based on passage of time and/or information available with management. d. Verification of subsequent receipts, post balance sheet date. x evaluation of estimates for provision of Expected Credit Loss in terms of Ind AS 109 on Financial Instruments. 3. a. assessing the appropriateness of the relevant accounting policy. b. evaluation of the design and implementation of internal controls over management’s assertion with respect to ‘cut-off’, to establish that control of

Control is the ability to direct the use of and obtain, substantially all the benefits from the goods. There is a risk of revenue not being recorded in the correct accounting period on account of the ability to establish with certainty the point of time when control has passed. (Refer Note 25 of the standalone financial statements

promised goods has passed to customers. c. testing the operating effectiveness of the said internal controls for selected sample of sales. d. substantive tests on a sample of sales to confirm that ‘cut-off’ has been properly applied, in particular, just before and after close of the accounting period

3 Symphony Ltd.

Deloitte Haskins & Sells

KAM 1. Occurrence and timely recognition of Revenue 2. Recognition of loss allowance as per Ind AS 109 on financial instruments measured at fair value

1. We refer to the Company’s accounting policies on Revenue and disclosure in note 2(iii) to the standalone financial statements. We focused on this area as a key audit matter due to the risk of incorrect timing of revenue recognition and its non-occurrence. The revenue recognition occurs when the entity satisfies a performance obligation by transferring the promised good at an amount that reflects the consideration to which the entity expects to be entitled in exchange for transferring the said goods. Since the Company focuses on revenue as one of the key performance measure, it could create an incentive for revenue to be recognized though the performance obligations have not been satisfied by the Company. Accordingly, revenue recognition was determined to be a key audit matter and a significant risk of material misstatement. 2. A significant degree of judgment is required to determine the amount of loss allowance to be recognized with respect to investments made in financial instruments which are fair valued through other comprehensive income. The Company has material investments in the said category of financial instruments wherein significant downgrade in the fair value of some

1. Assessed the appropriateness of the Company’s revenue recognition accounting policies by comparing with applicable accounting standards. • Tested the effectiveness of the Company’s controls over the correct and timely recognition of revenue. • Obtained supporting documentation for sales transactions recorded during the year to determine whether revenue was occurred and recognised in the correct period. • Assessed the revenue recognised with substantive analytical procedures to ascertain whether the revenue recognised has any unexplained variations. • Assessed the adequacy of the Company’s disclosures related to revenues. 2.Identification of loss events, including early warning and default warning indicators; • Assessment and approval of individual impairment provisions; •Governance including model validation and the assessment of the suitability of models, appropriateness of assumptions, consideration of post model adjustments and approval of provisions;

instruments have been observed and accordingly loss allowance for the same has been recognized. Refer note 38.1 to the standalone financial statements.

and •Completeness and accuracy of data input into models and provision calculators. In additions For modelled provisions we tested data inputs and agreed a sample of data used in the models and calculators to source systems. We involved our fair valuation specialists to test the assumptions and calculations. We evaluated the methodology to establish model parameters and assessed the appropriateness of the models used. The last traded market prices of two similar securities, of the same Company were considered. The yield implied in the price for both the securities was computed as of the date of trade. An average of the implied yields was considered for purpose of fair value calculations. The discounted cash flow method was applied to calculate the present value of coupon payments and redemption amount at respective payment dates.

4 Voltas Limited

S R B C & CO LLP

KAM 1. Revenue recognition on long-term MEP contracts

1. The Company’s revenues include revenue from long-term Mechanical, Electrical and Plumbing (MEP) contracts which are recognized over a period of time in accordance with the requirements of Ind AS 115, ‘Revenue from Contracts with Customers’. Due to the nature of the contracts, revenue is recognized based on percentage of completion method which is determined based on proportion of contract costs incurred to date compared to estimated total contract costs, which involves significant judgments including estimate of future costs, revision to original estimates based on new knowledge such as delay in timelines, changes in scope and consequential revised contract price and recognition of the liability for loss making contracts/ onerous obligations.

1. Reading the Company’s revenue recognition accounting policies and assessing compliance of the policies with Ind AS 115. We performed test of controls over revenue recognition through inspection of evidence of performance of these controls with specific focus on determination of progress of completion, recording of costs incurred, estimation of costs to complete and the remaining contract obligations. We performed test of details, on a sample basis and evaluated management estimates and assumptions. We assessed management’s estimates by comparing estimated cost with actual costs and discussion on the project specific considerations with the relevant project managers including on our project site visits. We assessed that, fluctuations in commodity and currency prices, delays and cost overruns related to

2. Recoverability of and Impairment Allowances of receivables and contract assets of international business operations

Accuracy of revenues and onerous obligations and profits may deviate significantly on account of change in judgments and estimates. Considering the estimation involved in estimation of revenues, the same has been considered as key audit matter. 2. As at March 31, 2019, receivable and contract assets of international business operation comprise of ` 562.79 Crores. Recoverability of certain receivables and contract assets are impacted due to several factors like the customer profile, delays in completion certification in certain projects due to long project tenure and project disputes and financial ability of the customers, etc. The assessment of the impairment of such trade receivables and contract assets requires significant management judgment.

the performance of work are properly taken into consideration while estimating costs to come and also assessed the accounting treatment of expected loss on projects including variable consideration which is recognised in accordance with the Company’s accounting policy of revenue recognition. We examined contracts with low or negative margins, loss making contracts, contracts with significant changes in planned cost estimates and probable penalties due to delay in contract execution. We assessed that the contractual positions and revenue for the year are appropriately presented and disclosed in the standalone Ind AS financial statements. 2. We evaluated the Company’s processes and controls relating to the monitoring of trade receivables and review of credit risks of customers. We assessed the design and tested the operating effectiveness of relevant controls in relation to the process adopted by management for testing the impairment of these receivables and the contract assets. As a part of substantive audit procedures, we tested the aging of trade receivable and contract assets. We examined the Company’s assessment of the customer’s financial circumstances and ability to repay the debt based on historical payment trends and the reason for delay in collection of trade receivables including any project disputes. Further, we assessed the expected credit loss impairment and the receipts and certification after year-end. We assessed the disclosures on the contract assets and trade receivables in Note 13 and Note 14 respectively, and the related risks such as credit risk and liquidity risk in Note 47 of the standalone Ind AS financial statements.

3. Impairment of Investments in Rohini Industrial Electricals Limited

3. During the earlier years, the management had identified impairment indicators on the investments made in wholly owned subsidiary “Rohini Industrial Electricals Limited” (RIEL) and accordingly impairment provision of ` 65.13 Crores was recognized. On an annual basis, the Company performs impairment assessment by comparing the carrying value to their recoverable amounts in order to determine whether any additional impairment provision/ reversal are required. For the purposes of above impairment assessment, value in use has been determined by discounting forecasted cash flows and considering the inherent nature of these calculations being subject to sensitivity to the inputs used for forecasting the cash flows and judgments used by management in such forecasts, the assessment of impairment of investment in RIEL was determined to be a key audit matter in our audit of the standalone Ind AS financial statements.

3. We assessed the appropriateness of the Company’s valuation methodology applied in determining the recoverable amount. In making this assessment, we also evaluated the objectivity and independence of Company’s specialists involved in the process. We assessed the assumptions around the key drivers of the cash flow forecasts including projected order value and margins, discount rates, expected growth rates and terminal growth rates used. We also assessed the recoverable value headroom by performing sensitivity testing of key assumptions used. We discussed potential changes in key drivers as compared to previous year / actual performance with management in order to evaluate whether the inputs and assumptions used in the cash flow forecasts were suitable. We tested the arithmetical accuracy of the models.

5 Whirlpool of India Ltd.

MSKA & Associates

KAM 1. Evaluation of uncertain tax positions (Direct Tax and Indirect Tax)

1. The Company has transactions with related parties in other countries and hence is subject to transfer pricing regulations as specified under Income-Tax Act, 1961 in India. Certain transactions with related parties and various tax positions taken by the Company are challenged by the relevant tax authorities. Further certain tax positions relating to reporting of taxable turnover, selection of tax rates, non-collection of statutory forms, etc. in indirect tax are challenged by relevant tax authorities. Management has assessed the Litigations/ Assessments status and has applied judgment in classifying/ taking appropriate actions as required under ‘Ind AS 37 -

1. a. Analysed the list of ongoing litigations, Management’s assessment of the possible outcome of the case and related accounting/ disclosures made in the standalone financial statements. b. Verified the completeness of the information by corroborating prior year work papers and changes, if any, to tax litigations status with the underlying documents. c. Auditor’s expert was involved to reassess Management’s assessment of the possible outcome. d. Assessed the appropriateness of presentation/ disclosures in the standalone financial statements.

Provisions, Contingent Liabilities, and Contingent Assets’. We have determined this matter to be key audit matter due to the significance of the amounts and judgments involved.

B. Industry- Clocks & Watches

S.no Company Name

Auditor’s Name

Type Topic Particulars Principal Audit Procedure

1 Titan Company Limited

B S R & co llp

KAM 1. Revenue Recognition

1. Revenue from sale of goods is recognized when control of the products being sold is transferred to the customer and when there are no other unfulfilled obligations. The performance obligations in the contracts are fulfilled at the time of dispatch, delivery or upon formal customer acceptance depending on customer terms. We identified revenue recognition as a key audit matter because the Company and its external stakeholders focus on revenue as a key performance indicator. This could create an incentive for revenue to be overstated or recognized before control has been transferred. Additionally, the Company has adopted Ind AS 115 – Revenue from Contracts with Customers, which is the new revenue accounting standard. The application and transition to the accounting standard is complex and is an area of focus in the audit. Refer note 2(v) and 17 to the standalone financial statements

1. We assessed the appropriateness of the revenue recognition accounting policies and its compliances with applicable accounting standards. We read the contracts with customer, distributors and franchisees to determine appropriateness of revenue recognition. We evaluated the design of key internal financial controls and operating effectiveness of the relevant key controls with respect to revenue recognition on selected transactions. We evaluated the design, implementation and operating effectiveness of management’s general IT controls and key application controls over the Company’s IT systems which govern revenue recognition, including access controls, controls over program changes and interfaces between different systems. We performed substantive testing by selecting samples of sales made at the retail outlets using statistical sampling and tested the underlying sales to collection reports and bank statements. For other sales (excluding retail sales), we performed substantive testing for the revenue transactions using statistical sampling and tested the underlying documentation supporting the sales. We assessed the adequacy of disclosures made.

2. Inventories 3. Impairment of Investment In

2. The Jewelry and Watches divisions of the Company hold inventory at various locations including factories, stores and third party locations. The Company has a plan wherein inventory is verified on a periodic basis to ascertain the existence of inventory. Inventory valuation involves significant assumptions and estimations made by the Management. Management also makes an estimate for slow moving inventory based on the age of the inventory. We have identified inventory as a key audit matter because of the number of locations that inventory is held at and the judgment applied in the valuation of inventory and provision for inventory. Refer note 2(xv) and note 9 to the standalone financial statements. 3. The Company held significant amounts of investments in subsidiaries. Management

We tested, on a sample basis, specific revenue transactions recorded before and after the financial year end date to determine whether the revenue had been recognised in the appropriate financial period. 2. We assessed the appropriateness of the inventories accounting policies and its compliances with applicable accounting standards. We evaluated the design of key internal financial controls and operating effectiveness of the relevant key controls with respect to physical verification of inventory, valuation of inventory and provision for inventory. We evaluated the design, implementation and operating effectiveness of management’s general IT controls and key application controls over the Company’s IT systems which govern inventories, including access controls, controls over program changes, interfaces between different systems. For locations selected using statistical sampling, we attended physical verification of stocks conducted by the management as at the year end. We also performed surprise stock counts at select stores on a sample basis. For samples selected using statistical sampling, we obtained independent confirmations of inventories held with third parties. We tested, on a sample basis, the valuation of inventories as at the year end and the Management’s assessment of provision required for obsolete and slow moving inventories held as at the balance sheet date. We considered the adequacy and appropriateness of the disclosures in the financial statements, relating to the inventories. 3. We tested the design of key internal financial controls and operating effectiveness of the relevant

Subsidiaries And Inter corporate deposits

assesses at each reporting date if there is an indication, based on either internal or external sources of information, that investments in subsidiaries may be impaired. Where such indicators exist, management performs impairment testing. In performing such impairment assessments, management compared the carrying value of each of the identifiable cash generating units (“CGUs”) to which investments in subsidiaries have been allocated with their respective recoverable amounts. The recoverable amount of the CGUs, which is based on the higher of the value in use or fair value less costs to sell, has been derived from discounted forecast cash flow models to determine if any impairment loss should be recognized. Further, the Company invested its surplus funds in Short term Inter Corporate Deposits (“ICDs”) in an infrastructure conglomerate. The ICDs are carried at cost less provisions for impairment. We focused on these areas due to the magnitude of the carrying amounts of these assets and the fact that significant judgments were required by management (i) to identify whether any impairment indicators existed for any of these assets during the year; (ii) to determine the appropriate impairment approaches, i.e. fair value less costs of disposal or value in use; and (iii) to select key assumptions to be adopted in the valuation models, including estimating future cash flows, growth rates and discount rates. Refer note 2(xviii), 6.1, 10.4 and 35 to the standalone financial statements

key controls around the review of the assessment of impairment of investment in subsidiaries and ICDs. We evaluated management’s identification of CGUs, the carrying value of each CGU and the methodology followed by management for the impairment assessment in compliance with the prevailing accounting standards. We evaluated appropriateness of key assumptions included in the cash flow forecasts used in computing recoverable amount of each CGU, such as, growth rates, profitability etc, with reference to our understanding of their business and historical trends. We engaged valuation specialists who tested Management’s assumptions used for assessment of the carrying value of the subsidiaries. We performed sensitivity analysis considering a reasonably possible change in key assumptions used. We tested Management’s assessment of the provision required for ICDs. We also read the minutes with respect to the deliberations held in the Audit Committee of the Board and the Board Meetings with respect to the recoverability of the ICDs. We evaluated the appropriateness of the disclosure in the financial statements and assessed the completeness and mathematical accuracy.

C. Industry- Consumer Electronics

S.no Company Name

Auditor’s Name

Type Topic Particulars Principal Audit Procedure

1 Crompton Greeves Consumer Electrical Ltd.

SHARP & TANNAN

KAM 1. Goodwill

1. On the demerger of the Consumer Business from Crompton Greaves Limited (CGL) (now CG Power and Industrial Solutions Limited) and in terms of ‘Scheme of Arrangement’ the assets and liabilities of the Consumer Business along with certain brand usage rights were transferred to Crompton Greaves Consumer Electricals Limited (CGCEL). The excess of liabilities over net assets based on fair value and the share capital amounting to ` 779.41 crore, was shown as Goodwill in the books of CGCEL. The Company has adopted the policy of amortizing the goodwill in the books of account, on the basis of impairment test, only if there is an indication of impairment as at the reporting date. Based on the valuation done by the management’s consultant, the value of the goodwill is more than book value of goodwill as at 31st March, 2019, and hence, there is no indication of impairment. Due to the inherent uncertainty involved in forecasting and discounting future cash flows, determination of discount and terminal growth rates, which are the basis for computing the value of goodwill and the assessment of recoverability, these are the key judgment areas. In view of the above, the Company has carried out an impairment assessment of goodwill using a value-in use model which is based on the net present value of the forecast earnings of the cash generating units. The calculation involved using certain assumptions around discount rates, growth rates and cash

1.a) Critically reviewing the Company’s assumptions pertaining to externally derived data in relation to key inputs, such as, long-term growth rates and discount rates; b) Assessed the appropriateness of the forecasted cash flows based on our understanding of the business and sector experience; c) Recalculated the weighted average cost of capital (WACC) used to discount the cash flows and assessed those rates to be reasonable based on knowledge of the economic environment and the risk premium associated with respective industries and countries. d) Compared the cash flow forecasts used in the impairment assessment prepared by management consultant with the budgeted numbers to the extent available; e) Evaluated the reasonableness of the forecasts made by the management by comparing past forecasts to historical results, where this was available, and by comparing to the current year results of the Company; f) Subjected related key assumptions to sensitivity analysis; g) Evaluated whether the Company’s disclosures concerning the sensitivity of the impairment assessment to changes in key assumptions, reasonably reflected the risks inherent in the valuation of goodwill; h) Skeptically reviewed management’s assumptions, judgement and the appropriateness of the valuation model used; i) Tested the mathematical accuracy of management’s calculations.

2. Ongoing tax matters, including provision for tax 3. Estimates - Provision for warranty

flow forecasts. This is considered as the key audit matter. 2. The Company’s unsettled tax positions include matters under dispute which involves significant judgment to determine the possible outcome of these disputes. These provisions are estimated using a significant degree of management judgment in interpreting the various relevant rules, regulations and practices. Provision for tax is also based on the presumption of significant estimates and assumptions on the allowability / disallowablilty of claims. Hence, it is considered as a Key Audit Matter. 3. Computation of provision for warranties and returns involves critical evaluation of historical data with respect to the nature of repair and returns, and estimation of costs in respect of future warranty claims and refunds. In view of the estimates being based on facts and circumstances that can change from period to period, this is considered to be a significant management judgment. Hence, a Key Audit

2. a) Obtained information of completed tax assessments and demands / refunds received by the Company during the financial year 2018-19; b) Critically reviewed the processes and controls in place over tax assessments and demands / refunds through discussions with the management’s internal experts / external consultants and reviewed the communications with those charged with governance pertaining to this issue; c) Involved our tax team to critically evaluate the assumptions in estimating the tax provisions and the possible outcome of the assessment / demands. Our tax team considered past precedence and other rulings in evaluating Company’s position on these uncertain tax positions. d) Assessed whether the Company’s disclosures in Note 31 to the standalone financial statements, the Contingent liabilities and commitments, adequately disclose the relevant facts and circumstances and potential liabilities of the Company. e) Also, considered the effect of all the information in respect of uncertain tax positions as at 31st March, 2019 and provision for tax to evaluate whether any review was necessary to Company’s position on these uncertainties. 3. a) Reviewed management’s contract risk assessments by enquiries, inspection of meeting minutes and review of correspondence with customers, where available. As we have the knowledge gained through field involvement and feedback on review of the operation, contract and project reviews, we also assessed the justification for and the accuracy of provisions; b) Reviewed the recognition and appropriateness of

Matter.

provisions by re-computing the amounts, obtaining management statements, evidence and supporting documents, such as, correspondence with clients or legal assessments of internal sources, where available; c) Considered the historical accuracy of estimates made by management through reviews of actual facts. In order to gain a complete and clear understanding, additionally performed enquiry procedures and reviewed relevant documents.

D. Industry-Domestic Electrical Applns.

S.no Company Name

Auditor’s Name

Type Topic Particulars Principal Audit Procedure

1 Bajaj Electricals Ltd.

S R B C & CO LLP

KAM 1. Cost to complete estimates in the EPC business segment and receivable in respect of the Madhyanchal and Purvanchal projects

1. Revenue from construction contracts is recognised based on the stage of completion determined with reference to the actual costs incurred up to reporting date on the construction contract and the estimated cost to complete the project. Cost estimates involves judgments including those relating to cost escalations; assessment of technical, political, regulatory and other related contract risks and their financial estimation; scope of deliveries and services required for fulfilling the contractually defined obligations and expected delays, if any. Further, for the year ended March 31, 2019, H1, 60,893 lakh of the revenue from the EPC business segment pertains to the Madhyanchal and Purvanchal projects in Uttar Pradesh (‘UP projects’). Also, as at March 31, 2019, H1, 21,852 lakh of ‘Trade receivables’ and H657 lakh ‘Amounts due to customers for contract work’ relates to the aforesaid projects. The revenue and

1. Evaluation of the design and operating effectiveness of controls relating to cost estimation; • Selected projects by applying audit sampling techniques and examining whether the cost estimates for these projects are in line with the supplier quotations obtained by the management and other internal estimates where latest supplier quotations are not available. Further, examining the contingencies identified by the management in these projects and corroborating the same with internal / external evidence available with the management . • Evaluation of delay analysis performed by the Company and testing with corroborative evidence like contractual terms and correspondences with the customers. • For the UP projects, examined whether the recognition and measurement of the receivables are in line with terms and conditions of the contract entered into with the customer, including management assessment of recoverability of the

2. Impairment allowance on trade receivables pertaining to operationally closed projects in Power Distribution (PD) and Transmission Line Tower (TLT) business 3. Recoverability of advances, investments in associates and recognition of liability for guarantee given for loans taken by associate

receivables of the UP projects are material to the financial statements. Accordingly, cost to come estimates and receivables in respect of UP projects have been considered as a key audit matter. [Refer Note 1D (3) of the standalone Ind AS financial statements] 2. As at March 31, 2019, trade receivables of H23, 968 lakh (net of impairment allowance of H6, 694 lakh) related to amounts collectible in respect of operationally closed projects in the PD and TLT business. In determining whether an impairment allowance is required, the management takes into consideration the aging status and likelihood of collection based on contractual terms, past experience, customer claims etc. Based on such assessment, specific allowances are made for receivables that are unlikely to be collected. Due to the involvement of high level of management judgment and materiality of the amounts involved, we considered the same as a key audit matter.[Refer Note 1D (2) and Note 5 of the standalone Ind AS financial statements] 3. As at March 31, 2019, the Company has the following in respect of Starlite Lighting Limited (‘SLL’):• Equity investment of H1, 637 lakh, fully impaired. • Preference investment of H1, 358 lakh measured at fair value through profit and loss • Preference investment of H4, 294 lakh measured at amortized cost, fully impaired • Trade advances of H4, 646 lakh (net of impairment allowance of H2, 200 lakh) • Loans of H280 lakh, fully impaired • Financial guarantee of H24, 200 lakh given by the Company for loans taken by SLL from the banks

outstanding balance as at March 31, 2019. 2. Examined management basis for identification of amounts which are ‘overdue’ and ‘not due’ for operationally closed projects where the receivables were material. For these samples, assessed whether the rationale behind the management’s judgment in determining the impairment provisions are adequate. • Examined the provisions made for these receivables by evaluating the overdue balances, customer’s historical payment patterns, and post year-end payments. Additionally, we also examined corroborative evidence including correspondence supporting any disputes between the parties involved, attempts by management to recover the amounts outstanding and the credit status of significant counterparties where available. 3. Obtained management’s future cash flow forecasts for SLL and testing the mathematical accuracy of the underlying value-in-use calculations and agreeing them to the approved one-year financial budget and future forecasts. • Comparing historical actual results to those budgeted and understanding the reasons for significant deviations in assessing the quality of management’s forecasts. • Assessing the key assumptions used in the fair value assessment, comprising sales growth rates, gross profit margin, net profit margin, perpetual

SLL has been making losses over the past several years. Management has performed a fair value assessment by forecasting and discounting future cash flows which involve significant estimates and judgment and determined that:a) No further impairment is required to be recorded for the year ended March 31, 2019. b) No liability is probable on the financial guarantee given by the Company for loans taken by SLL. Accordingly, it has been determined as a key audit matter. [Refer Note 4.1, 4.2 and Note 40(a)(ix) of the standalone Ind AS financial statements]

growth rate and discount rates. • Obtained the valuation report prepared by external valuation specialists from the management and assessed the reasonableness of the above assumptions used by management. • Assessing the headroom calculation performed by the management based on the recoverable value determined above and by performing sensitivity testing of key assumptions used.

2 IFB Industries Ltd.

DELOITTE HASKINS & SELLS

KAM 1. Revenue Recognition

1. Revenue from the sale of goods (hereunder referred to as "Revenue") is recognised when the company performs its obligation to its customers and the amount of revenue can be measured reliably and recovery of the consideration is probable. The timing of such recognition is when the control over the same is transferred to the customer which is mainly upon delivery. The timing of revenue recognition is relevant to the reported performance of the Company. Revenue may be recognised before completion of contractual performance obligation due to incorrect recording of point of time when the customer obtains control of the asset. Refer to the Accounting Policy Para 1d and Notes 21 to the Standalone Financial Statements

1. a) Assessing the appropriateness of the Company's revenue recognition accounting policies, in line with Ind AS 115 (“Revenue from Contracts with Customers”). b) Evaluating the designs and implementation of company’s controls in respect of revenue recognition. Testing the effectiveness of such controls over revenue cut off at year-end. Testing the supporting documentation for sales transactions recorded during the period closer to the year end and subsequent to the year end, including examination of credit notes issued aer the year end to determine whether revenue was recognised in the correct period. c) Developing an expectation of the current year revenue based on monthly trend analysis and comparing this expectation against actual revenue. Where appropriate, conducting further enquiries and testing.

3 TTK Prestige Ltd.

PKF Sridhar & Santhanam LLP

KAM 1. Revenue Recognition

1. TTK Prestige Limited (“the company”) has adopted IndAS 115 for the periods commencing on or after 1st April 2018. The Company had utilized the practical expedient

1. Our procedures included, among others, obtaining an understanding of the processes and relevant controls relating to the accounting for customer contracts.

to not restate contracts that begin and end within the same annual accounting period, applying the cumulative effect method with no restatement of the comparative period and comparative period continues to be reported under Ind AS 18. There are no significant contracts which are not completed as at the date of initial application (1st April 2018). The Company manufactures and trades a number of products related to kitchen appliances. Revenue is measured net of discounts, incentives and rebates earned by customers on the Company’s sales. Given the variety and large number of sales transactions and the adoption of new standard Ind AS 115, revenue recognition is considered a Key Audit Matter. Disclosure Note 5.6 and the accounting policies provide additional information on how the Company accounts for its revenue and how the implementation of the standard Ind AS 115 has affected the Company’s financial reporting.

With regard to the implementation of IndAS 115 we evaluated management’s conclusion on different types of contracts in light of the industry specific circumstances and our understanding of the business. Accounting policies: Assessing the appropriateness of the Company’s revenue recognition accounting policies, including those relating to discounts, incentives and rebates under Ind AS 115. Control testing: Testing the selected key controls for the revenue recognized throughout the year and calculation of discounts, incentives and rebates, including reviewing the results of testing by management, for their operating effectiveness and performed procedures to gain sufficient audit evidence on the accuracy of the accounting for customer contracts and related financial statement assertions. Evaluating the IT systems relevant for revenue recognition and the functioning of the related general IT controls. Tests of details: •Reviewed sales transactions recorded either side of year end as well as credit notes issued after the year end date to determine whether revenue was recognized in the correct period. • Comparing the current year estimates of discounts, incentives and rebates to the prior year and, where relevant, completing further inquiries and testing. •Obtaining the supporting documentation on sample basis for discounts and incentives given under schemes to agree to the amounts recorded as discounts and incentives during the period. •Critically assessing manual journals posted to revenue to identify unusual or irregular items. Disclosures: Tracing disclosure information to accounting records and other supporting

documentation.

4 V Guard Industries Ltd.

S.R. Batliboi & Associates LLp

KAM 1. Revenue from sale of products

1. Revenue is measured at the fair value of consideration received/receivable from its customers and in determining the transaction price for the sale of products, the Company considers the effects of various factors such as volume based discounts, rebates and other promotion incentives schemes (‘trade schemes’) provided to the customers. At year end, amounts for trade schemes that have been incurred and not yet provided to the customers are estimated and accrued. We have considered this as a key audit matter on account of significant judgment and estimate involved in calculation of provision for such trade schemes as at the Balance Sheet date. (as described in note 2.2(d) and 46 of the standalone Ind AS financial statements)

Assessed the Company’s accounting policy for revenue recognition including the policy for recording trade schemes in accordance with Ind AS 115. • Obtained understanding of the revenue process, the assumptions used by the management in calculation of accrual of trade schemes and design and implementation of controls. • Evaluated management’s methodology and assumptions used in the calculations of such accruals for trade schemes. • Tested on sample basis management’s calculation of the provisions for trade schemes at year end with approved trade schemes and underlying sales data, including testing of completeness and arithmetical accuracy of the data used. • Tested, on sample basis, credit notes issued to customer/ payments for incentives as per the approved trade schemes. • Performed analytical procedures to identify any unusual trends and items.

E. Industry-Gems & Jewelry

S.no Company Name

Auditor’s Name

Type Topic Particulars Principal Audit Procedure

1 PC Jewellers Ltd.

Walker Chandiok & Co LLP

Qualified Opinion

1. As explained in note 51 to the standalone financial statements, the Company has provided discounts of ₹ 513.65 Crores to export customers adjusted against revenues for the year ended 31 March 2019. The Company is in the process of complying with the requirements of the Master Circular on Exports of Goods and Services issued by the Reserve Bank of India and has filed the necessary applications with the appropriate authority for approval of such discounts, which is a prerequisite, under the Foreign Exchange Management Act, 1999. In the absence of such approval and material evidence related to the transaction, we are unable to comment on the impact, if any, of the same on the accompanying standalone financial statements.

EOM 1. Delay in receipt of proceeds against export of goods

1. We draw attention to note 52 to the accompanying standalone financial statements regarding the delays in receipt of proceeds denominated in foreign currency against export of goods made by the Company to its overseas customers aggregating to ₹ 966.43 Crores beyond the timelines stipulated under the Foreign Exchange Management Act, 1999. The management of the Company has represented that the Company is in the process of regularizing the defaults and has filed the necessary applications with the appropriate authority for Condonation of such delays. However, approvals for the same are awaited. Management is of the view that the possible

penalties etc. which may be levied for these contraventions are likely to be condoned by the regulatory authorities. Our opinion is not modified in respect of this matter.

KAM 1. Existence and valuation of inventory

1. The Company has an inventory balance of ₹ 4,988.11 Crores as at 31 March 2019, as disclosed in note 10 of the accompanying standalone financial statements. Refer note 3(j) for the corresponding accounting policy adopted by the management with respect to the inventory balance. The Company purchases gold from nominated agencies prescribed by the Reserve Bank of India. Further, the Company also purchases gold and diamonds from institutional parties and from the customers as per the exchange schemes announced by the Company. With respect to existence of inventory as at year end, there is an inherent risk of loss from theft or possible malafide intent, due to the high intrinsic value and portable nature of individual inventory items. In addition to the physical verification performed by the management with the help of an independent professional gemologist, the lenders of the Company also conduct stock counts, on a regular basis throughout the year, with the help of their appointed independent gemologists. With respect to valuation of the inventory, the Company categorizes diamonds purchased into the respective cost categories defined by the management based on price bands and other physical characteristics of the diamonds. For diamond jewellery items purchased from the customers under the exchange scheme, the

1. Obtained an understanding of the management’s process for physical verification, recognition and measurement of purchase cost of gold, diamonds and cost of manufactured jewellery items. •Evaluated the design and tested the operating effectiveness of controls implemented by the Company with respect to such process including controls around safeguarding the high value inventory items. •Assessed the appropriateness of accounting policy and management valuation methodology adopted by the management. •Evaluated the professional competence, objectivity and professional experience and competence of the gemologist used by the management. •On a sample basis, tested invoices and other underlying records to validate the costs and characteristics basis which the inventory is categorized for inventory management and valuation. •Obtained the management physical verification records and inventory reconciliation performed by the management as at the year end. •Inspected reports of physical verification done by gemologists appointed by the lenders of the Company for corroborative evidence. •Performed independent test counts to corroborate management counts and valuation based on management categorization with the help of an independent professional gemologist used as an auditor’s expert. •On a sample basis, tested samples of inventory sold

2. Recoverability of investments, loans and short-term financial assets, given to/due from subsidiary companies

Company involves independent professional gemologist to determine the correct cost category of such items. Considering the complexities involved, portable nature of diamonds, high inherent risk and high level of estimation uncertainty involved in valuation of the inventory, the existence and valuation of inventory has been determined as key audit matter for the current year’s audit. 2. The Company has investments of ₹ 135.28 Crores, long-term loans amounting to ₹ 125.44 Crores and short-term financial assets of ₹ 58.28 Crores recoverable from four wholly-owned subsidiary companies as at 31 March 2019. The investment in the aforesaid subsidiaries are accounted for at cost in accordance with Ind AS 27, Separate Financial Statements. The Company assesses the recoverable amount of the investment when impairment indicators exist by comparing the fair value (less costs of disposal) and carrying amount of the investment as on the reporting date. The loans given to and the short-term financial assets recoverable from, such subsidiary companies are accounted for as per Ind AS 109, Financial Instruments. Refer note 3(h) for the accounting policy disclosed in the accompanying standalone financial statements. Owing to the current operations of three of the subsidiary companies with aggregate carrying value of investments, long term loans and short term financial assets amounting to ₹ 185.15 Crores as at 31 March 2019, the management has performed an impairment assessment and has estimated the recoverable amount of the aforementioned carrying value from the subsidiaries using the ‘Discounted Cash Flow

before year-end and subsequent to year-end to corroborate management’s assessment of net realisable value of closing inventory balance. •Evaluated disclosures made in the accompanying financial statements for appropriateness in accordance with the requirements of the accounting standards. 2. Obtained an understanding of management’s processes and controls for determining the fair valuation of long term loans, investment and short term financial assets. •Evaluated the design of and tested the operating effectiveness of the key controls around the fair valuation of the long term loans, investment and short term financial assets including controls around cash flow projections. •Evaluated the professional competence, expertise and objectivity of the valuation specialist used by the management. •Assessed the appropriateness of the valuation methodology used to arrive at the estimated fair value of the investments and other aforementioned recoverable using an auditor’s expert. •Tested the accuracy of the input data provided by the management to the valuation specialist by reconciling the projected cash flows to approved business plans of the investee company. •Tested the reasonableness of the key assumptions used in the cash flow projections and fair valuation, such as growth rates, targeted savings, discount rate, etc. considering our understanding of the business, industry and relevant market factors. •Obtained and evaluated sensitivity analysis performed by the management on aforesaid key assumptions and performed further independent

valuation model’, which is complex and involves the use of significant management estimates and assumptions that are dependent on expected future market and economic conditions. The key assumptions underpinning management’s assessment of the fair valuation include, but are not limited to, projections of future cash flows, growth rates, discount rates, estimated future operating and capital expenditure. Basis the valuation performed as above, the Company has recorded ₹ 0.05 Crores and ₹ 14.24 Crores as provision for impairment in the value of investments in and recoverability of short term financial assets respectively of the subsidiary, PC Universal Private Limited, as disclosed in note 53 to the accompanying standalone financial statements. Changes to assumptions could lead to material changes in estimated recoverable amounts, resulting in either impairment of the investments, the long term loans given to or short term financial assets recoverable from these subsidiaries. Accordingly, considering the materiality, complexity and significance of judgment involved, the fair valuation of aforesaid investments, long term loans and short term financial assets has been considered to be a key audit matter for current year’s audit.

sensitivity analysis to determine impact of estimation uncertainty on the fair valuation. •Tested the mathematical accuracy of the cash flow projections, fair valuation computation and resulting impairment recorded in the current year. •Evaluated the appropriateness of disclosures made in the financial statement in relation to such investments and other aforementioned recoverable and their fair valuation as required by applicable accounting standards.

2 Rajesh Exports Ltd.

PV RAMANA REDDY & CO.

KAM 1. Revenue Recognition

1. In view of adoption of Ind AS 115 “Revenue from Contracts with Customers” (new revenue accounting standard) effective April 1, 2018, the company has changed its revenue recognition policy with regards to timing of recognition based on the satisfaction of the identified performance obligations and related disclosures. Revenue is also an important

1. We assessed the Company’s process to identify the impact of adoption of the new revenue accounting standard. Our audit approach consisted testing of the design and operating effectiveness of the internal controls and substantive testing as follows : • Evaluated the design of internal controls relating to implementation of the new revenue accounting standard.

element of how the Company measures its performance. The Company focuses on revenue as a key performance measure, which could create an incentive for revenue to be recognized before meeting the requirement of revenue recognition under Ind AS 115. Accordingly, due to significant risk associated with revenue recognition, it was determined to be a key audit matter in our audit of the Ind AS financial statement. Refer to Note 1(v) to the Standalone Financial Statements.

Selected a sample of continuing and new contracts and performed the following procedures : - Read, analysed and identified the distinct performance obligations in these contracts. - Compared these performance obligations with that identified and recorded by the Company. - Considered the terms of the contracts to determine the transaction price including any variable consideration to verify the transaction price used to compute revenue and to test the basis of estimation of the variable consideration. • Performed sample tests of individual sales transaction and traced to sales invoices and other related documents. Further, in respect of the samples tested assessed that the revenue has been recognized as per the tariff agreed to the customers or latest correspondence with customer. • Selected sample of sales transactions made pre- and post-year end, agreeing the period of revenue recognition to supporting documentation and ensured that sales and corresponding trade receivables are properly recorded in the correct period. • Checked the bank advices and credit notes on a sample basis for the net settlement and reviewed aged items for any disputed amounts. • We inspected underlying documentation for any journal entries which were considered to be material related to revenue recognition.